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Local News Executives Ask Senate Panel for Help to Survive Internet Competition

February 2, 2022 by Tom Ramstack
<strong></img>Local News Executives Ask Senate Panel for Help to Survive Internet Competition</strong>
Jennifer Bertetto, President And CEO, Trib Total Media, Inc.

WASHINGTON — Local news executives made suggestions Wednesday to a Senate panel on how to take their industry off of life support in the face of internet competition.

Growth of internet news is severely damaging local newspapers, radio and television outlets, turning some small communities into news deserts that lack reporting on their hometowns.

As Facebook and Google increase their news reporting and share of advertising revenue, they are driving out competition in bigger and bigger communities, according to news executives who testified to a Senate Judiciary subcommittee.

“We’re fading away,” said Joel Oxley, general manager of Washington, D.C., news radio station WTOP. “Something has got to change if local journalism is going to survive.”

Oxley and other news executives said much of the competition is unfair.

Facebook and Google republish news from local media companies but share only a portion of the ad revenue their stories produce for the internet giants.

“This is a real Catch-22,” Oxley said.

Sen. Amy Klobuchar, D-Minn., chairwoman of the subcommittee on competition policy, antitrust and consumer rights, cited sobering statistics about how Big Tech is destroying local news.

In the past 17 years, 2,200 local newspapers have gone out of business, she said. Newspaper advertising revenue fell from $37 billion in 2008 to $9 billion in 2020.

Meanwhile, Facebook’s advertising revenue increased 33% in one year last year. In a single three-month span, ads produced $61 billion for the company.

Industry statistics show that newspaper employment fell from 71,070 workers in 2008 to 31,120 in 2020.

To a lesser extent, radio and television stations say the broadcasts retransmitted over the internet are hurting them as well.

Klobuchar’s main idea for reinvigorating local news is the Journalism Competition and Preservation Act, which she co-authored.

The bill, which she introduced last March, is described on the Congress.gov website as a means “to provide a temporary safe harbor for publishers of online content to collectively negotiate with dominant online platforms regarding the terms on which content may be distributed.”

Google and Facebook’s ad-sharing contracts allow the internet platforms to republish local news stories but kick back part of the advertising revenue when users click on websites of the hometown outlets.

The internet companies use boilerplate contracts that each local news outlet must sign separately. Otherwise, they are banned from the web platforms.

Klobuchar’s Journalism Competition and Preservation Act would allow all the local news companies to collectively negotiate with Google and Facebook.

A goal of the bill is to give the smaller companies much greater leverage in contract negotiations that would return more ad revenue to them, potentially saving their industry.

Klobuchar acknowledges that joint negotiations — similar to cartels — normally would not be allowed under antitrust laws. However, she says the “difference in bargaining power between newspapers and Big Tech” means it might be time to carve out an exception.

She also warned against the threat to a free press when only a few companies can dominate which news reaches consumers.

“Local news is foundational to our democracy,” said Klobuchar, whose father was a newspaper columnist in Minneapolis, Minnesota.

Her bill won support from news executives but warnings from economists and legal experts who testified at the Senate hearing.

Jennifer Bertetto, president of Pittsburgh-based Trib Total Media, Inc., said, “We carry no weight in negotiations with [internet] platforms.”

Her company publishes newspapers for small southwestern Pennsylvania towns. In recent years, the company shut down two of the newspapers and laid off more than 100 workers.

She said she operates with a payroll of about $7 million a year but last year earned only $144,000 from her company’s republication contracts with Facebook and Google.

Daniel Francis, a Harvard Law School lecturer on regulation and business competition, said collective negotiation might be good for local news companies but it would drive up prices on the internet for consumers.

“Cartels are the supreme evil of antitrust,” Francis said.

The Justice Department traditionally has opposed cartels, “just like this one,” he said in a reference to Klobuchar’s bill.

“The harm would far outweigh the good,” Francis said.

Tom can be reached at tom@thewellnews.com

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